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What is the difference between restarting the computer and turning it off and powering it on again?

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Power-cycling a system very slightly reduces its life. In operation, chips and other components are warm. Cooling and then rewarming them enough times will eventually make something crack--a capacitor, a solder joint, something. Also, a "warm" boot is faster than a cold start because almost all computers skip the RAM check on warm boots.

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Also power cycling a computer allows for changing the settings of various processor MSR options (like enabling VT-x), which soft rebooting does not do. – Nick Bastin Nov 2 '10 at 18:24
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Automation really. Restarting just allows the computer to turn the computer off and on for you. In reality, the power isn't actually toggled off on a restart, but rather the computer literally "restarts", dumping its memory and starting from scratch.

There isn't really any benefit to turning the computer off and back on again, restart is sufficient.

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Some processor and bios options can only take effect with a power cycle. – Nick Bastin Nov 2 '10 at 18:24
I've had issues with hardware where a power cycle would work but not a warm reboot. For instance, every couple of months the WiFi chipset (Broadcom) on my HP Pavilion laptop stops working. Warm boots do nothing, but a power cycle always corrects the problem. – CarlF Nov 2 '10 at 20:38
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